In this episode of the podcast, we talk with author and journalist Jame Davis about his new book, "The Business Secrets of Drug Dealership: How to Make It in the 21st Century." Jame talks about how he got his start in the drug business, how he became a writer, and how he ended up writing a fictionalized version of his own life story. He also talks about his experiences with dealing drugs, and what it's like to work at a farm that grows and tests on illegal drugs. Jame is a writer and journalist who has been writing about drugs and cannabis for a long time, and is now writing a book about how to make it in the business. We also talk about how Jame got into the drug dealing business, and why he thinks drugs should be legalized in the US. And why he doesn't think weed should be legal in the states that allow recreational use. If you're interested in getting into the weed business, check out Jame's book, The Business Secrets Of Drug Dealership: How To Make It In The U.S. Government and How To Deal With It, which is out now. You can find it at Businesssecretsofdrugdealing.ca/TheBusinessSecretsofDealing, and it's serialized on the New York Times best selling paperback edition of The Ten Crack Commandments, which will be out later this month. It's also be available in Kindle, iBook, Paperback, Hardcover, and Hardcover edition, and hardcover edition on amazon, which starts on Amazon starting at $99.99, and paperback on Nov. 1st, 2019. All three are available in hardcover $99 and paperback $99, including Audible, $99 paperback, and Audible.99.00.00, and a limited edition hardcover is also available on Audible $99 or Blu-99, plus shipping starts at $49,99 and $99 at Audible UK, and shipping is available in paperback, too.0099, USRP $99/AVGO, and Boucher 49,99, Bespoke is a year from Amazon Prime, and will be shipping nationwide.99/Vaynerdyed, too, and Best FiDS, and Bespoken, too? We'll be shipping you a copy of The Business of Cannabis, we'll be sending you an ad-free version of the book, too!
00:01:45.000It's called The Business Secrets of Drug Dealing.
00:01:48.000You can find it at businesssecretsofdrugdealing.com and I'm serializing it.
00:01:54.000But basically, somebody I knew for ages in a completely different capacity sort of came out to me last year And said, you know, I've been a high-level drug dealer for a long time,
00:02:11.000basically my whole life, and wanted to tell a story about, you know, sort of the whole progression of his life.
00:02:28.000He started off, believe it or not, selling mushrooms.
00:02:31.000He sort of grew up half in the projects and half in an upscale suburb.
00:02:39.000In the upscale suburb, he sold mushrooms.
00:02:43.000Which he basically got through mail order at a time early in the sort of history of the internet when there were some loopholes about things.
00:03:00.000So he ends up having this whole career and he wanted to sort of explain to me what The rules of the game were and do sort of a book version of the Ten Crack Commandments and so we sat down and we couldn't quite figure out how to do it at first but we ended up essentially doing a sort of fictionalized version of his
00:03:31.000life and And the progression is amazing because he goes from being a dealer in all these different parts of the country in different social spheres.
00:05:21.000All the different things that he learned in the course of his career about how to do the job and not get caught, how to rig a load to drive cross-country, how do you do a dummy car.
00:05:37.000He tells a story about how basically you want four cars, you want the guy in the front seat to be To look like a drug dealer, have a terrible record, drive badly, basically to attract the police.
00:05:56.000The second car is watching to see if there's cops in either direction.
00:06:00.000And then the fourth car is basically driving up behind the load car to prevent anybody from seeing the license plate and that sort of thing.
00:06:09.000So he just talks about all this stuff, and it's fascinating, and it was a new kind of writing for me because I've never really done anything except straight journalism, and we sort of had to do it in narrative form, and so we're putting it out serially online right now, which is really cool.
00:06:25.000So you did one of those change the names to protect the innocent sort of deal?
00:07:06.000I'm a huge fan of serialized detective stories.
00:07:12.000I was a big fan of Dashiell Hammett and Raymond Chandler, and I loved Black Mask Magazine, which was the big pulp noir magazine in the 20s and 30s.
00:07:25.000I grew up reading all those stories, and it was in the back of my mind always that I wanted to try this and write a book on a deadline.
00:07:38.000It's basically co-written with this anonymous character who can't appear with me on shows like this anywhere because he's still not captured.
00:07:49.000So are there warrants out for this guy?
00:08:58.000In other words, if you can have the self-discipline to actually get through one of these jobs and not blow up and be crazy, then you're going to handle yourself well at a car stop.
00:11:17.000I haven't had this much fun, like fun, fun writing anything for a long time because, you know, most criminal memoirs, and again, I grew up a junkie in terms of reading this stuff.
00:11:29.000I love books that are written after the fact by people who were in crime, you know, like Papillon was one of my favorite books growing up.
00:11:39.000I mean, it's an amazing story about not just crime, but about prison and what's that like.
00:11:44.000But they're always written by people after they got caught, right?
00:11:48.000And so there's never that book by the person who's still out there and talking about what outlaw life is like.
00:12:00.000Successfully, still on the other side of the law.
00:12:07.000And he has all these insights that I would never have thought about.
00:12:11.000He talks about how there's a thing he calls the hood price.
00:12:17.000When you're selling in black neighborhoods, even he charges a higher price There are more problems that you inevitably run into when you're dealing in those neighborhoods because there's more cops,
00:12:36.000which means more lawyers, which means more security, which means more attention to detail.
00:12:40.000When you deal to rich white kids, nobody's paying attention.
00:12:44.000So there's less overhead in the business, which is fascinating.
00:12:55.000He spent a lifetime kind of just keeping all this stuff in his head, always wanting to put it down, and it just got to be too much, and he just sort of tapped me on the shoulder one day and said, can we have lunch?
00:13:08.000I just want to talk to you about something.
00:13:10.000And how long had you known him before this?
00:16:07.000And cops having to do that, that's not even a misdemeanor in New York.
00:16:12.000And if you've got to drag somebody in for selling a 50-cent cigarette, that's not exactly Serpico, you know what I mean?
00:16:19.000You don't join the force dreaming of doing that.
00:16:23.000But yeah, the Sessions thing is terrible.
00:16:26.000Yeah, having that guy and in that kind of a position and saying things like good people don't smoke marijuana or You know when families come across the border illegally, we're gonna separate the parents from the children like the fuck is wrong with you And then you throw in a good joke dose of the jesus Yeah,
00:16:43.000exactly scary fucking time at least Trump has said that he's gonna he's not going to support sessions on Going after marijuana in states where it's legal.
00:16:54.000He's gonna leave the states To take care of it themselves.
00:16:59.000The problem with Donald Trump, and this is something that I didn't clue into until I'd spent a lot of time watching the guy and following him around, is that he can sound like he believes something very deeply.
00:17:12.000And you can be absolutely convinced that he even logically thinks a thing.
00:17:19.000But he'll have a meeting with somebody, and five minutes later he'll have completely the opposite opinion.
00:17:25.000So I have no confidence that Donald Trump will, anything that he says, that it will stay his opinion on anything.
00:17:33.000He can be convinced to go to a complete 180 on basically any issue, which is scary.
00:17:39.000But isn't he, in some ways, the perfect representative of America because of that?
00:17:45.000And I talked about this when I was covering him because people said, oh, what does this billionaire New Yorker have in common with With ordinary Americans.
00:17:57.000He has exactly the same media habits that they have.
00:18:00.000He reads the same dumb shit on the internet.
00:18:02.000He has the same total inability to separate fact and fiction.
00:18:08.000He's completely credulous when he reads a news item about something that he personally agrees with.
00:18:16.000And he'll Tweet it out five seconds later before he checks it out, which is like what every other American does.
00:18:22.000They get something on Facebook and they immediately share it with all their friends.
00:18:27.000And this is an American thing now, just the total inability to logically look at things.
00:18:35.000Yeah, and the short attention span too.
00:18:37.000Short attention span, drifting in and out of conversations, not being able to pay attention to memos unless his name is in there a hundred times.
00:18:50.000And, you know, it's funny because if you...
00:18:53.000If you watch Trump's speeches, or actually better yet, if you read Trump's speeches, they would pass out the text of what Trump was supposed to say before his events.
00:19:06.000And so I'd be sitting there, I'd be looking at the remarks, and they would be cogent from one end to the other.
00:19:12.000Then he would get up there and the first line would be like, oh, it's so great to be back in Manchester, New Hampshire.
00:19:17.000I'm sure I always loved being here and that would be right.
00:19:20.000And then he would veer off and he would start saying one thing and then the other thing and his thoughts would drift in all these different directions and then when you looked at the actual transcript Of what Donald Trump had said, he not only wasn't completing thoughts,
00:19:40.000He talks in these sort of strange fragments and he'll drift from one idea to another and they won't have any logical connection to each other.
00:19:50.000And people still responded to it, which tells you something both about him and about his audience, right?
00:19:57.000Because they're on the same weird mental wavelength where just sort of disconnected bits of emotion and thought is enough now, right?
00:20:16.000I think what it's revealing is what a small amount of time most people spend actually thinking.
00:20:24.000Thinking about ideas, thinking about themselves, thinking about behavior, thinking about the impact that someone who's in the position of president can have.
00:20:34.000Very few people are out there actually thinking.
00:20:37.000I mean, a pretty large number overall, but very few in terms of percentages.
00:20:41.000In terms of the people that you can reach and the people that will show up at his press rallies, that's a big thing too, right?
00:20:47.000Who the fuck is going to go to a campaign speech for anybody unless you're a journalist?
00:20:51.000Well, that's interesting because I've been to a million campaign rallies, right?
00:21:01.000I would rather basically stick a railroad spike in my ear than voluntarily go to one of these things and not be paid to do it because normally a campaign speech is like this supernaturally boring experience where a guy or a woman...
00:21:21.000Stands up there and reads out a pre-selected, market-tested list of political cliches that have no meaning whatsoever and that don't represent what they're actually going to do when they're in office anyway.
00:21:37.000And if you have to listen to that 40 or 50 times in a row, which is what happens when you're covering campaigns, you want to kill yourself.
00:23:25.000That was a line that he used to pull out a lot.
00:23:27.000Look at these bloodsuckers, these people reporting information.
00:23:31.000Yeah, again, we'd be sitting there and a whole bunch of reporters and we're a bunch of geeks in Arrow shirts, you know, and we got pads and we're kind of surrounded by, you know, in some cases, 15,000 people.
00:23:45.000You know, we're kind of turning in our direction.
00:23:48.000And, you know, in a couple of cases, it was definitely up in the air whether this was going to turn ugly or in a few places it did turn ugly.
00:27:48.000Like, the way I look at it, it's like, this is indicative of where America stands today.
00:27:53.000It's not just that he's a good representative of America because he has the same media consumption habits and the same inability to read books and all these different variables, but also because he's pilled up.
00:28:09.000There's a little bit of a precedent there because Kennedy had so many physical problems that...
00:28:17.000I'm not sure if you remember, there was a book, The Dark Side of Camelot, that came out by Cy Hirsch, where it talked about how...
00:28:25.000Kennedy in the morning used to have a Secret Service agent give him a shot of basically amphetamines every morning, and he would sort of pace around the Oval Office talking about who he wanted to whack today, you know, and this was like the background for Bay of Pigs and,
00:28:44.000So it's very dangerous when a president is, you know, pharmaceutically altered.
00:28:50.000When a person who is, you know, if he's on speed and he's tweeting threats to a nuclear power, like, I mean, that would be a very ironic but terrible way for all of us to end.
00:29:10.000I know who wrote it, but I can't find it.
00:29:11.000You know, you've got to save that and put it in your favorites because we talk about it so many times.
00:29:15.000You've got to figure out a way to save that and put it in a bookmark.
00:29:21.000He had the Duane Reade pharmacy, and then there's this speculation about what the most recent stuff is that he's on, which is, again, one ingredient in fen-fen.
00:29:32.000But one of the things that they were saying is that when you look at the side effects of this stuff, one of the side effects is delusional perception of reality, delusions of grandeur, aggression, impulsiveness, like all these things that we associate with Donald Trump.
00:29:58.000That we might be dealing with essentially a pharmaceutical intervention into not just American lives in terms of individuals, but in terms of the way policy is driven.
00:31:04.000The people who tend to succeed are the ones who can do three or four appearances a day, fly to three different cities a day, and most of those people are either health freaks, people who are in good physical condition.
00:31:18.000Obama was definitely one of those people who had to have a run at some point, or else he couldn't do that schedule.
00:31:26.000But Donald Trump You know, you look at him and it's kind of a mystery.
00:32:11.000Which we have never heard about again.
00:32:14.000Greenberg was later publicly slammed as someone who provided uppers to rich people in Manhattan.
00:32:19.000A metabolic imbalance, in quotes, if true, could be electrolyte insufficiencies, anaerobic imbalances, acid imbalances, and an assortment of related disorders that can have serious health consequences.
00:32:31.000Yet his other doctor, Dr. Harold Bornstein, said he had been Trump's doctor since 1980 and had never mentioned the metabolic imbalance found by Greenberg.
00:33:45.000I mean, everybody in America's pulled up and, you know, I don't know how a person whose diet is cheeseburgers and Diet Coke could run for president without drugs.
00:33:57.000He eats fried chicken with a fork and knife of a weirdo.
00:34:38.000Fenn was actually the name of the very cheap speed that used to be imported.
00:34:46.000When I lived in Russia, there was a type of speed that used to come from the Baltics that allegedly, you know, the urban legend was that the Nazis had all their soldiers on a cheap speed for the long marches going into Russia.
00:35:15.000Wasn't that the origins of methamphetamines?
00:35:20.000Wasn't methamphetamines created by the Nazis?
00:35:24.000I believe it was, and I think this is one of the speculations as to why they could get suicide bombers, the kamikazes, to slam their jets into aircraft carriers.
00:35:43.000That's also, yeah, there's definitely some speed that gets prescribed and steroids also to soldiers.
00:35:49.000I mean, if you talk to people that have been in, you know, they'll tell you about what different things that they allowed them to take and gave them to take.
00:35:57.000But that modafinil stuff is, that's really common.
00:36:02.000And then I know a lot of fighter pilots will take that.
00:36:06.000Keeps you from getting sleepy, keeps you alert and awake.
00:36:09.000And that was also something Hillary Clinton was supposed to be on.
00:36:34.000I have a buddy of mine who's a writer who, he's got some health issues, and he's on it all the time, and he said, if I don't take it, I'm a mess.
00:37:43.000Well, I think we're probably going through a similar period now where all kinds of stuff is being prescribed that we're going to find out 50 years from now.
00:38:00.000Prozac, Adderall, and then the numbers of SSRIs that are prescribed needlessly.
00:38:05.000Who knows how many people actually need those things versus how many people are just having a bad day and went to the doctor and they give you something that numbs you up.
00:38:27.000Experimenting on people's brains, and absolutely, these pharmaceutical companies have billions of dollars in massive influence, and they're making it so this stuff is okay.
00:38:36.000We've just had a look at the number of people that are dying, just dying from opiate pills.
00:38:41.000If those were illegal drugs, we'd be saying, there's a goddamn epidemic.
00:38:46.000Yeah, but there's no question that it's a conscious strategy to get people hooked and get them taking those pills in every conceivable scenario so that they will seek them out in other areas, non-legally.
00:39:07.000But some prosecutor is going to have to figure out some way to hold some of those companies accountable because they're definitely doing that on purpose.
00:39:15.000But even if they do, it's like the tobacco thing.
00:40:19.000Yeah, and I think a lot of what people call fake news is just news that is very heavily slanted in one direction.
00:40:25.000And people talk a lot about how Fox is fake news.
00:40:30.000Well, most of the time when you watch Fox, what they're just doing is they're selectively picking out stories that they know are going to rile up their elderly lives.
00:40:56.000But, you know, working as a journalist now is very, very different.
00:41:02.000The business is undergoing extremely rapid change and it's not something that we really have reckoned with.
00:41:11.000We haven't sat down and had a discussion about where this is all going and how we can fix it because The business is changing in a way that is extremely negative, and no one's talking about how to reverse that.
00:41:25.000Long-form investigative reporting started to disappear in the 80s, but it's accelerated to the point where there's almost none of that now.
00:41:35.000Almost everybody who works in the business is doing quick hits, and there's almost no Time left to do, you know, kind of real hardcore investigative work.
00:41:47.000And we've trained our audiences also to be unable to consume that kind of stuff.
00:41:54.000So, you know, we're all basically doing clickbait now and I think it's a really dark time in our business.
00:42:03.000Well, it's also this weird time transitioning between paper and digital and trying to get people to pay for digital.
00:42:10.000I mean, I subscribe to a few of them online, Washington Post, New York Times, where you pay, but I don't think very many people are doing that.
00:42:19.000I think it's probably a small amount of people that are paying.
00:42:35.000And this is a fascinating sort of subplot to what happened to the media business because a lot of that is because of something that Google did a long time ago.
00:42:45.000They had this thing called the first click rule.
00:42:47.000Which is sort of mandated that all news sites have at least some free content or else the algorithm would push the news story far down on the search results.
00:43:02.000So if you didn't have free content on your site, if you didn't meet Google's first click rule, when you search for a news story, you just wouldn't find it.
00:43:13.000So in the early days of digital journalism, all the news companies offered their content basically for free.
00:43:24.000And that trained audiences to not pay for journalism, basically.
00:43:32.000And it's pretty hard to put the genie back in the bottle and tell everybody to go back and And pay for everything.
00:43:42.000So we're in this place where everybody's sort of consuming free media.
00:43:46.000And not only that, there's this additional problem of the, you know, the internet platforms like Facebook and Google pushing news that they already know people are going to agree with to users.
00:44:02.000So there's sort of less news that challenges people.
00:44:06.000They're just not going to see it, you know, because that's not the way the algorithms work.
00:44:33.000It's probably a little bit worse on Facebook than it is on Google, because Google, you at least have some control over what you search for.
00:44:41.000But even Google will prompt you with things, right?
00:44:46.000But with both of them, yeah, they're accumulating lots and lots of information about your...
00:44:54.000Not only about what you read, but about the things that you buy, the movies that you watch, what your predilections probably are, what your opinions, your political stances.
00:45:03.000And so they pick out news stories that they think you're likely to endorse or spend a lot of time reading.
00:47:07.000Yeah, I did the Globe, I did the Boston Herald, and I delivered the New York Times for a while.
00:47:14.000The New York Times is interesting, because it didn't pay as well, and there were larger routes.
00:47:21.000You had to go much further, because there was very few houses that would get the Times, but you felt like you were doing something special.
00:48:47.000So now the distribution is all Google and Facebook, and the content is all being made by somebody else.
00:48:55.000So it makes it very difficult to make money, A, and then B, you just don't have that personal relationship with the consumer anymore, which is a completely different sort of paradigm.
00:49:56.000Friends who get involved with podcasting who have come over from radio.
00:50:02.000There's friends that have been fired from radio jobs like, you know what, I'm just gonna start a podcast and charge people five bucks a month.
00:50:07.000But as soon as you do that, people are like, why the fuck would I pay?
00:50:11.000Adam Carolla for free, Joey Diaz for free.
00:50:24.000And, obviously, that has huge consequences because that forces people who create the content to get the money from somewhere else.
00:50:34.000They either have to be sponsored by an advertiser who might have, you know, certain expectations.
00:50:40.000But, you know, it's certainly not good for people who make content that it's like that.
00:50:46.000And it creates, I think, a lot of bad habits with the readers, too.
00:50:51.000I mean, they just, you know, rather than...
00:50:54.000Rather than look for the best stuff, they just look for what's available and what they can read for free.
00:51:00.000Also, I think it opens up the door to all this wacky advertising where pop-up ads and scroll down ads, like you try to scroll down a screen and the ad follows with you.
00:51:12.000They're so invasive and they're everywhere, even on really good websites.
00:51:16.000Like, say if you go to CNN, you get the real stories, and then below you get this stuff that looks like stories, but there's a very faint print that says paid content.
00:51:53.000You know, you go to all these different...
00:51:56.000There's like one of those pages that you go to where there's just dozens and dozens of windows and boxes that you can click on of different individual clicky bait stories where you go to each one of them and they'll take you to 40 pages of different people that have gained weight or lost weight or are poor now or whatever it is.
00:52:22.000One of the things that's really bad about that is that if you spend enough time doing that, your brain stops being able to do other things.
00:52:29.000When you're reading books, books require you to sit there and construct in your head all the visuals for everything that you're reading.
00:52:37.000You have to imagine what the people look like.
00:52:40.000You have to do all this mental work to construct the scene.
00:52:45.000So your brain is actively engaged in this really highly specific and creative way.
00:53:18.000It's not only bad in itself, but it makes it impossible for us to do the other thing, which is more constructive.
00:53:25.000Yeah, no, it's almost like mental range of motion.
00:53:28.000Like if somehow or another your joints were restricted where you could only move a certain amount, after a while you would lose your full range of motion.
00:53:57.000Or, when I was younger, I read more fiction, which is...
00:54:03.000Harder because it requires you to do more, you know, sort of mental construction work.
00:54:09.000Now, it's much, if I'm going to read a book, it's typically nonfiction, which is linear, which is an argument, right?
00:54:15.000It requires less work of the reader, right?
00:54:20.000It may be just as interesting, but it just requires less work.
00:54:24.000So, like, the hardest thing to read is, you know, Anna Karenina or something like that, right?
00:54:29.000Because you have to not only think, but you have to construct.
00:54:32.000But if you're just reading, you know, The Diary of Kim Kardashian or something like that, you're just kind of listening to somebody, you know, going like that.
00:55:03.000The positive things are that anybody can have a voice now and anybody who has something interesting to say can be instantly elevated and have an audience overnight.
00:56:01.000Lil Tay is a nine-year-old girl who is famous now on the internet for talking shit and showing all the money she has and all the things she buys.
00:58:26.000Because I remember when Bush was president...
00:58:31.000Like, talking to reporters, Bush used to do this thing where he would carry around a biography of Dean Aitchison for weeks and weeks and weeks just to prove to reporters that he could read.
00:58:42.000And we all used to joke with each other, like, nobody's stupider than this is ever going to be president, right?
00:58:49.000And now, you know, you look back and Bush is, you know, he's like Einstein compared to Trump.
00:58:56.000I had a joke that I did back in my Netflix special from 2005 when Bush was in office, where it was a bunch of people were trying to figure out how dumb people are.
00:59:09.000And they're like, the only way, they're like, there's speculation, like, let's get a smart guy to act dumb.
01:00:33.000Well, that was a weird time, too, right?
01:00:35.000Like, during the inauguration, when no celebrities wanted to go, and they had to dig out, like, really weird, like, real fucking on-the-outskirts celebrities.
01:01:30.000We, like, jolt it over into, like, this parallel world where things just don't seem...
01:01:35.000Like, at least things used to make sense.
01:01:39.000Like, you'd be disappointed that this guy won, or you'd be disappointed that the country was doing this, or that we were invading Iraq, or whatever it was.
01:01:46.000But it would kind of seem like the world.
01:01:51.000Well, it's kind of like what we were talking about before.
01:01:56.000Previously, like the entertainment industry, politics was tightly controlled by a small group of cigar-chumping people who sat in the back room.
01:02:06.000And in both parties, they carefully outlined a sort of narrow range of acceptable political opinions.
01:02:16.000And in one party, you could be all the way up to somebody like Ron Paul, But they tended to put somebody like George Bush as the candidate.
01:02:27.000But there was no directly appealing to the electorate and asking them who they wanted to be the candidate.
01:02:36.000I mean, Donald Trump is really the first internet president.
01:02:39.000He completely bypassed that entire oligarchy.
01:02:43.000He didn't have to go through the priesthood to get to be president, which on the one hand, Trump is evidence of a good thing, because it's actually more democratic than the system was before, where it was pretty much closed to everybody except for a few people who paid their dues through this system.
01:03:02.000But Trump, just by being famous and just by attracting media attention, He was able to bypass all the usual tests and bypass the party's decision-making process.
01:03:17.000And he got to be president, but he's like Lil Tay, right?
01:03:20.000I mean, he just represents the dumber side of us as opposed to the more enlightened side of us.
01:03:25.000So it's hard to know what to think about it.
01:03:28.000I mean, when I was covering it, I thought, on the one hand, this is evidence that the electorate is breaking away from being told who to vote for.
01:03:37.000On the other hand, The first time they take that freedom out for a test drive, this is what they pick?
01:04:31.000Well, it's all depending upon how it plays out, right?
01:04:33.000I mean, civilizations have absolutely fallen in the past.
01:04:36.000This idea that civilization won't fall, in my opinion, is akin to the people that live on the Big Island thinking that the volcano won't erupt again.
01:04:49.000Like, so, all our ideas about maintaining civilization are an attempt to prolong this state or mitigate any possible disastrous effects of collapse, right?
01:07:32.000All I'm saying is it would be a good time to reconsider how we run things.
01:07:37.000And I think one of the good things about having a guy like Trump in office is maybe we should sit down and say, hey, we probably shouldn't have a popularity contest to see who controls the nukes.
01:08:21.000And one thing I'm hoping is that this...
01:08:23.000This presidency and the whole idea of having a popularity contest will allow people to realize, first of all, we shouldn't have one alpha chimp running things.
01:08:33.000That's an antiquated idea that was really great in a tribe of 50 nomads.
01:08:38.000You get them together and you have the wisest, strongest one with the most battle experience.
01:08:51.000But when there's 350 million people and you have the ability to manipulate things and you have tweets and Facebook posts and you can make wacky little Tay videos, we're not designed for this.
01:09:04.000And we have some structures that rely on the popularity contest and some that the public has no control over whatsoever, like the Federal Reserve.
01:10:32.000I read that she had used a website that she thought should have stopped her from donating the extra amount because it was being divvied amongst many people and that it should have been returned to her, which I don't know enough about it that candidates are supposed to return extra funds once they've crossed over the amount that an individual is supposed to give.
01:10:53.000I guess that happens, but it didn't happen in these cases.
01:11:13.000Yeah, that was one of the stories that wasn't followed up after 2016, but it was one of the things that came out in those hacked DNC things was that there was a little bit of a scam going on in terms of...
01:11:30.000As you say, the individual donation limit is pretty small.
01:11:35.000It's like $2,700 for an individual, so a couple, it's $5,400.
01:11:39.000So what they would do is they would host these dinners with celebrities like George Clooney and a bunch of his friends, and they would raise all this money.
01:11:50.000And theoretically, the money was supposed to go only a tiny portion of it to the presidential campaign.
01:11:55.000The rest of it's supposed to go to the regional parties.
01:11:58.000But what was actually happening, according to Politico anyway, was that the money was basically...
01:12:05.000Going to the parties and then going immediately back to the presidential campaign.
01:12:08.000And a lot of the people who gave the money didn't even know that that was happening and they were upset about it.
01:12:17.000But that was a story that wasn't followed up after 2016. Yeah, there's just entirely too much money.
01:12:23.000Entirely too much money in politics, but how would you ever do it without the money?
01:12:26.000Now, once the money's in, how do you pull it out?
01:12:29.000How do you say, no, no, no, no more influence, no more special interest groups, lobbyists are illegal.
01:12:36.000Yeah, I mean, I think they should probably have very brief, publicly funded elections where the course of time is maybe five weeks.
01:12:51.000Yeah, it says O'Donnell donated $4,700 to Alabama Senator Doug Jones in his special election against Roy Moore, $3,600 to Pennsylvania Rep.
01:13:01.000Conor Lamb for the special general electorate he won in March, $2,950 to California Rep.
01:13:10.000Adam Schiff for his primary, $4,200 to Illinois congressional candidate Lauren Underwood for her primary run, and $3,400, $450 to Omar Vaid.
01:13:32.000I don't look to see who I can donate most to.
01:13:35.000I just donate assuming they do not accept what is over the limit.
01:13:42.000I don't know how convinced I am by that explanation, but it doesn't really matter because the reality is...
01:13:50.000There are a million ways that you can legally give money to campaigns now that don't involve just the individual donation.
01:13:59.000You can give money to a foundation or a 501c3 or whatever it is that buys an ad that will help the candidate just as much as it would if you don't donate it directly.
01:14:13.000In the post-Citizens United universe, It's a story, but the bigger story is that very rich people and companies can basically spend unlimited amounts of money on campaigns.
01:14:28.000Yeah, this whole story is over, what was that, all told?
01:14:48.000Well, he got a big bump from talking about her in the debate.
01:14:52.000And, you know, that was another thing that he did very early on is he clued into the fact that people hate journalists and they hate Hollywood actors.
01:15:01.000And so he made sure as much as possible to talk about all the groups, the major food groups of hate in America, right?
01:15:23.000I think particularly the targeting of journalists was brilliant because he was able to portray us as the wealthy elite He's the billionaire, but he's pointing the finger at us as, oh, look, they're the guardians of rich America,
01:15:40.000which worked and was a brilliant thing.
01:16:18.000If they don't, there's probably something wrong with them because the press corps in most cases really is out to get them, or at least is dangerous.
01:16:30.000But with Trump and Nixon, it went to a whole new level and went to a paranoid place.
01:16:38.000But on the other hand, I don't want to bore you with this, but the whining about being kicked out of the White House and not being able to fly with Trump and the sort of separation between the president and the press corps and the fact he doesn't show up at the White House correspondence dinner,
01:17:04.000I think it's very strange, the response in our business that, oh, we don't get to hang around with the president and pal around behind the rope line with them anymore.
01:17:26.000It's kind of a separation of church and state thing for me.
01:17:30.000I had an experience when I covered the Obama campaign, and I liked Barack Obama as a candidate in 2008. I was really impressed by him, but I remember going into the plane the first time.
01:17:42.000Going back into the press section and I see that there's photos all over the walls of the campaign plane.
01:17:49.000And apparently there's a tradition where each of the reporters had like a little sort of high school yearbook photo taken with the candidate where, you know, they got their arm around Obama and they're posing and it was a tradition to kind of put the photo up on the wall.
01:18:05.000And I'm like, you know, this is not a good look for the press corps.
01:18:09.000Even if you like the guy, you You've got to at least pretend to have a little bit of that.
01:18:15.000The mode is supposed to be there, you know what I mean?
01:18:24.000What happens if you do a story about the guy that's complimentary and it comes out that you've put a picture of yourself with your arm around the guy?
01:19:25.000Well, first of all, the holy grail of reporting is to latch on to a politician before they become famous and before they become president and follow them all the way.
01:19:36.000And that way you get to be the insider who gets invited into the Oval Office.
01:19:41.000So it's a big thing that a lot of reporters kind of dream of is to latch on early to somebody like Bill Clinton.
01:19:52.000And become the sort of favorite reporter on that beat.
01:19:58.000That's why at the outset of presidential elections, you'll often see a lot of jockeying within newsrooms to see who gets to cover which campaign because people always want to pick the winner because they think they're going to get a book deal out of it at the end and they're going to end up having their own show on MSMEC or whatever.
01:20:18.000But yeah, what's the feeling right now?
01:22:23.000I mean, if you add in the fact that we've had concerns about nuclear conflict with two different nations, right, since Trump has been elected, I mean, there's the North Korea thing, and then there's the fact that We've had military exchanges where Russian mercenaries reportedly have died.
01:22:49.000The nuclear clock, which was established, the doomsday clock, which was established way back in the 50s, has us at the The most dangerous point since 1953. Really?
01:23:04.000At a time, in their estimation, I forget what the organization is actually called, but I think it's Physicians for Social Responsibility.
01:23:17.000But this right now is more dangerous than the Ka-7 shooting, the Cuban Missile Crisis, like we're We're at a moment that's incredibly tense between these two countries.
01:23:31.000More so than the Cuban Missile Crisis.
01:24:01.000And the people who do it I think are the same people who won a Nobel Prize last year for the sort of anti-nuclear, the UN ban on nuclear weapons.
01:24:17.000Do you remember after 9-11, we used to have terrorist threat colors?
01:24:40.000And what's fascinating about this, and I only heard about this because I wrote about this a few months ago, And I made a mistake by saying that the color used to toggle between red, which was the highest,
01:24:56.000and green, which was the lowest, but apparently not once in its entire history was it ever green.
01:25:01.000Like, they never had threat level low.
01:25:39.000Well, so the program, it took a huge hit when one of the guys who was involved, who was the former head of Homeland Security, if I'm not mistaken, came out with a story about That he had been told by some of the Bush people to jack up the color in advance of an election.
01:26:07.000And it was shortly after that story came out that they discontinued the program.
01:26:13.000It came out in a book by the former head of the Homeland Security Department.
01:26:17.000So right before an election, they were told, time to go on.
01:26:34.000As a journalist, do you look at these times and say, this is great, this is great for business, or do you more so look at it as a human being and go, this is just a fucking mess, and I wish we weren't so ridiculous?
01:26:49.000So when I first started covering the Trump campaign, I thought, this is the most awesome thing ever, because That dynamic I was talking about before about reporters wanting to be on the ground floor with a future winner.
01:27:05.000Nobody wanted to be on the Trump campaign because nobody thought he was going to win.
01:27:08.000I was stoked to be assigned to cover Trump because I thought this is the most insane thing ever.
01:27:19.000I thought this is the black comedy that I was sort of born to cover and born to write.
01:27:25.000And for the first, I don't know, five or six things that I wrote about it, about Trump, I thought it was the most amazing, crazy, interesting story of my lifetime.
01:27:35.000And then it took this incredibly dark turn where he actually won.
01:27:47.000I knew some of the people in his campaign.
01:27:50.000I can't say this definitively, but I have a very good educated guess that they had absolutely no expectation of it ever even being close, let alone winning.
01:28:02.000And that they did this as a publicity stunt in the beginning, probably with the aim of either creating a media network or just bolstering Trump's overall Q rating or whatever it was.
01:28:17.000I think NBC might have pushed him towards the presidency by firing him from The Apprentice.
01:29:31.000And the same thing that made Trump perfect for that show made him perfect as the main protagonist in campaign coverage, which is actually really just a really long, super boring reality show, or at least it used to be, until Trump came along.
01:29:46.000Trump completely changed the dynamic of it.
01:29:48.000If you're thinking of it in terms of how it looks to a network...
01:30:25.000They believe the things that we say less than ever.
01:30:27.000All the polls show this, that there's been a dramatic downturn in how much people will put stock in the things that people like me say, right?
01:30:35.000But they're watching television news more than they ever have, by a lot.
01:30:40.000So what do those two data points say together, put together, that people are consuming news not as news, but as entertainment?
01:32:28.000Ted Cruz, you know, first of all, my favorite part of that whole campaign was the thing that he couldn't shake about being the Zodiac Killer.
01:32:35.000LAUGHTER And reporters would give him shit about it.
01:32:42.000We would talk amongst each other, like, who's going to ask him about it next?
01:32:45.000And everybody knew that it was bullshit, that he was born after the killing started and everything, all that stuff.
01:32:53.000But somebody would always make it a point to say, so what do you think about the rumors about...
01:32:57.000And you could see that it completely drove him to distraction.
01:33:01.000He didn't know how to make a joke out of it.
01:33:30.000He drove that guy crazy to the point where, you see, I think it was in New Hampshire, he was giving a political campaign speech and he broke down.
01:33:48.000It was kind of a spoof of campaign coverage because he did this whole campaign diary and then he just kind of went into this deadpan I think?
01:34:18.000And they put, you know, Ed Muskie in the grips of an Ibogaine frenzy, right, was the caption.
01:35:15.000But I know quite a few people that have that have had pill problems and have gone to Mexico and taken...
01:35:23.000My friend Ed Clay, who has an actual center down there now, he started it after he had gone down there for treatment.
01:35:30.000He had a back injury, I believe it was, and got hooked on pills and was like, Jesus, I've got to figure out a way to get off these fucking things and did Ibogaine and then cleared it right up.
01:36:08.000And I don't think it was an accident that Hunter's coverage was that he chose that year to do these diaries.
01:36:20.000I remember my father telling me about how every reporter would wait for Rolling Stone to come out that week so they could read the coverage of the election.
01:36:29.000But Hunter kind of took this unknown senator from the Dakotas, George McGovern, and made him into this...
01:36:43.000I don't think that McGovern would have won the nomination without that sort of relentless hyping that he gave him.
01:36:50.000He probably would have won the presidency if it wasn't for the vice president having that issue with he had gone through electroshock therapy.
01:38:09.000It was so much more interesting and bizarre and weird and he saw all these great details and he was just...
01:38:17.000I think it was a great approach to journalism but sadly there aren't that many people who can pull it off because it just required surpassing literary talent and that's incredibly rare.
01:38:31.000What was a unique combination of Fiction writing along with an actual understanding.
01:40:10.000And one way I really saw that comparison was your brilliant coverage of the financial crisis and what was the mechanisms behind the scene of the financial crisis.
01:40:22.000And I became a really big fan of your work reading that because I think you covered that as well, if not better than anybody.
01:41:22.000It's really just a massive, corporatized version of, like, Selling oregano is weed, basically.
01:41:31.000They took stuff that these incredibly worthless, highly risky mortgage loans, right?
01:41:40.000You know, they would give out loans to everybody with a pulse.
01:41:43.000You know, whether you had a job or not, whether you were a citizen or not, didn't matter.
01:41:48.000Important thing was to get the loan, immediately sell it off, chop it up, turn it into securities, and then they used this highly advanced sort of mathematical trick to turn all that sort of mortgage hamburger into AAA-rated securities.
01:42:04.000So you'd have like a junk-rated mortgage, like the riskiest loan in existence, something that was so toxic that And companies like Country Ride wouldn't want to hold on to it for more than a week because they were afraid the stuff would blow up.
01:42:22.000And then they would sell it off to a pension fund or an insurance company in the form of a AAA-rated security, which is as safe as a U.S. Treasury bond.
01:42:38.000Again, the metaphor of taking baby powder and selling it as coke or whatever, that's exactly what it was.
01:42:48.000They just took worthless shit and sold it as something that was gold.
01:42:53.000And they did it for years and years and years and years, and they knew that this gigantic Huge bubble of risk and disaster was just accumulating and that someday it was going to all explode and cascade and ruin the economy.
01:43:11.000But everybody was trying to time it right and bet on when that would happen and make their money before that judgment day came.
01:44:18.000But basically what he would do is he would get on a boat in New York and he had this sort of beautiful mahogany box with a crank on it that had two holes in it.
01:44:31.000And he would show all the guests that he would put a blank piece of paper in one end, turn a crank, and a $100 bill would come out the other end.
01:44:40.000And he convinced them all that it was a machine that made money.
01:44:48.000An increasing amount of money for this invention, and he wouldn't sell it until the last day when he would sell it for $40,000 or $50,000, and then he would disappear and jump off the boat in France and never be seen again.
01:45:27.000So yeah, it was obviously fake, but that's what the mortgage scam was.
01:45:32.000They were taking basically blank paper, these subprime loans that belonged to janitors who were going to foreclose within 10 minutes, right?
01:45:45.000And They were telling people that, oh, we have this new mathematical process that actually makes this stuff really safe, and you can put it in your college endowment,
01:46:00.000you can put it in your pension fund, and so all these people whose retirement monies were based on Securities were buying all this shit that they thought was was AAA rated and that's that's how they woke up, you know in 2008 2009 and they found their 401ks were were,
01:46:20.000you know Wiped out by 40% or whatever it was my neighbor really that happened to him my neighbor bought this plot of land and had this dream to build his dream house and He would go by the plot of land and he was always cleaning up and getting ready and I was talking to him and then Boom!
01:46:54.000He eventually got really sick and they took him out of his house and brought him somewhere, but I think he's dead now.
01:47:00.000But yeah, his story was awful, awful to hear.
01:47:04.000This guy who was in his 60s, who had got this piece of land with a nice view, and was like, this is where I'm going to build my dream house.
01:47:12.000And he had all this money prepared for it, all this money saved away, and he was ready to rock and roll, and then boom, it all went out.
01:47:22.000Somebody put a hole in the bottom of the boat and everything went to the bottom of the ocean.
01:47:27.000Yeah, and then he probably got ripped off twice because his tax dollars went to go bail out the guys who, you know, because some of the banks got stuck holding some of this shit.
01:47:37.000And rather than eat the losses like your friend did, they got the Federal Reserve to buy it from them, you know, or the Treasury.
01:47:48.000And how the fuck did they get away with giving the CEOs bonuses?
01:48:02.000If you looked at the fine print of all the bailouts, it basically said that you had to repay the money by X time before you could start paying people exorbitant amounts of money again.
01:48:17.000But a lot of those conditions were never really followed, and the conditions of repayment were kind of glossed over, and the The companies, they were supposed to be able to pass these things called stress tests,
01:48:34.000which demonstrated that they were back on solid footing again before they paid people bonuses, but the stress tests were all fudged.
01:48:46.000Crime and corruption and illegality basically in every direction during that whole period and not just in the government but in all these companies as well.
01:49:08.000Yeah, well, because one of the things that I found out that was really interesting was I did my first story about this, and I got this incredible reaction because it turns out that the financial press,
01:49:23.000there is nobody in the financial press who writes for ordinary people.
01:49:28.000Like, it's basically what I was doing was a translation job.
01:49:30.000I was trying to Basically take what had happened and explain it in a way that a person who knew nothing about finance would be able to understand.
01:49:41.000And it turns out that nobody's doing that.
01:49:43.000So all these people who had questions about it, who wanted to know what had happened to their money, or why did my house get foreclosed on, or what's a subprime mortgage, Wow.
01:50:32.000It's a bank that, you know, I wouldn't be surprised that a lot of people listening have their accounts at this bank.
01:50:40.000They had to pay a settlement to the government because they were intentionally targeting elderly black people to Sell subprime mortgages to, and they called the mud people.
01:50:54.000And there were all these toxic emails going back and forth about how stupid they were and how they'll buy anything, et cetera, et cetera.
01:51:02.000In the emails they called the mud people?
01:51:05.000And so they had to pay a settlement to the government.
01:51:08.000But the racial component of that crash was something that I didn't really clue into until late, but that was a big part of it, too.
01:51:18.000A lot of it involved these mortgage lenders going into particularly lower middle class black neighborhoods and knocking on doors where there'd be an elderly person at home and saying,
01:51:34.000Hey, would you like to refi your mortgage and you'll have a little bit of extra spending money this month, right?
01:51:40.000And the person won't know anything about finance and they'll sign this refinance deal that allows them to save a little bit of money each month, not knowing that they had just converted their fixed mortgage into a floating mortgage.
01:51:55.000And that as soon as the interest rates change, you'd have people who went from paying $900 a month to paying $7,000 a month, right?
01:52:05.000And suddenly they're out in the street, and the company that sold them the loan is long gone by then.
01:53:00.000And again, if you cover elections, it's incredibly boring, and you never hear anything of substance, and it's not terribly complicated.
01:53:07.000And, you know, the Democrat says that, you know, we want to help the middle class, and the Republican says we want to protect family values, and that's pretty much the extent of the intellectual challenge in terms of covering that stuff.
01:53:21.000And I always thought to myself, you know, politics in America must be a lot more complicated than this, right?
01:53:28.000It's a hidden thing where it's incredibly complex and diabolical and the real machinations of power must be visible somewhere.
01:53:39.000And I think that you find that when you start looking into how Wall Street works, how money works, how central banking works, How the concentration of wealth works.
01:53:56.000Basically, the subprime scheme was an effort to pull the remaining savings out of the population.
01:54:06.000In the old days, investment banks made their money by lending money to companies who would build factories, and they would make stuff and sell it around the world, and everybody would make money, and even the population would benefit from it.
01:54:21.000But that manufacturing economy, it's all gone.
01:54:26.000So you have this financialized economy and they have no normal beneficial way to make money.
01:54:34.000And all they can really do is look to see where is their money and how can we get it.
01:54:39.000And most people had money in their houses, right?
01:54:43.000Like the accumulated savings of most people, whatever was left after the internet crash in the 90s, Was in real estate.
01:54:52.000And this was the scam by which they took the wealth that was left in the pockets of ordinary people and transferred it to, you know, nine people in Manhattan, basically.
01:55:07.000I mean, that's why you have, you know, when we talk about wealth inequality now, right, being a huge factor that, you know, the top...
01:55:18.00095, I'm sorry, the top 1% of the population owns 90% of the wealth in the country or whatever it is.
01:55:26.000That's a consequence of schemes like this where they're finding out where people have a little bit of money and they're systematically coming up with scams to move it from there to here.
01:55:41.000And that was the other part of the story that I ended up having to cover later, which was the last time they tried something like this, like during the SNL crisis, which was also sort of a giant fraud scheme also that involved real estate lending and,
01:56:26.000I mean, they committed fraud on a broad scale.
01:56:29.000But some of these companies were into the things that were even worse than that.
01:56:32.000I mean, you take HSBC. HSBC admitted to laundering $850 million for a pair of Central and South American drug cartels, including the Sinaloa Cartel, right, which is suspected in thousands of murders like And,
01:56:49.000you know, they admitted to this activity.
01:56:54.000They agreed to a deferred prosecution agreement with the government where nobody did a day in jail.
01:57:01.000No individual had to pull out a dime out of their own pockets to pay.
01:57:05.000The shareholders ponied up $1.9 million, but some of that was tax deductible, which means we paid some of that fine.
01:57:14.000And the only real punishment with any teeth is that some of the executives had to partially defer their bonuses for five years.
01:57:24.000So, laundering $850 million for narco-terrorists gets you a total walk.
01:57:33.000You know, that tells you basically everything you need to know about Do we prosecute white-collar crime in this country?
01:57:56.000There's a video of Loretta Lynch and Lanny Brewer, because this is before Loretta Lynch was Attorney General, but she was basically the head of this deal.
01:58:11.000They talked about the fact that the HSBC branches, because most of this was done in Mexico, HMEX, which was the subsidiary company, they had special teller windows built to fit cash boxes that the drug cartels were bringing into the bank.
01:58:30.000So, basically, you've seen the scene in Scarface where the guys come in with duffel bags of cash to the bank, right?
01:58:37.000And, you know, that's like a montage, you know, there's that song, I forget what song it is in the background.
01:59:00.000And they agreed to the amount, everything.
01:59:05.000So, yeah, it was a $1.9 billion settlement, but, you know, it's not like it came out of the pockets of the people who did it, and it's not like any of the people who did it are in jail.
01:59:14.000It's just, you know, a thing that happened, and, you know, that's five weeks of profit for the bank, so what the fuck?
01:59:24.000Did you see the documentary Inside Job?
01:59:27.000Yeah, we covered a lot of the same territory.
01:59:31.000That was a sobering documentary where they're talking to the very people that caused the financial crisis and realizing that these people were economics professors that eventually got these jobs, really lucrative jobs with banks, and how they finagled this system and made it so it looked like these things were appropriate.
02:01:10.000And So on the one hand, it allowed people to create a whole lot of capital, which allowed them to lend more money, which theoretically allowed people to buy more houses.
02:01:23.000But in reality, it just created the system where all these people had bets that were back and forth on all these properties.
02:01:44.000And then there were people who had bets on that who started to lose money.
02:01:47.000And it's like this cascading whirlpool of shit that happened.
02:01:51.000And again, it just started out as an idea to just create more money to lend.
02:01:57.000And it turned into this nightmare Mechanical scenario that just that created losses You know in this almost apocalyptic fashion and and a lot of them had no idea but that that was going to be the eventuality Wow,
02:02:18.000It's definitely crazy stuff as a person who didn't really follow finance before how much has that affected your life now like the way you look at things and I definitely pay a lot more attention to the fine print when I enter into any financial contract.
02:02:49.000So almost every bank that's out there where you can have a bank account and a mortgage is a bank that I've written about some massive scandal before.
02:03:04.000But yeah, I worry about it all the time.
02:03:06.000I mean, I have friends in finance who call me and they They tell me that, you know, that things are incredibly unsafe and that this, that and the other could happen.
02:03:17.000And so I have an anxiety level about things that I never had before.
02:03:21.000But apart from that, yeah, I mean, that's a natural consequence of having to spend seven years looking at all these horror stories.
02:03:32.000It's crazy you spent that much time on it.
02:03:35.000Do you see any other bubbles coming up?
02:03:38.000Yeah, people talk about that all the time.
02:03:42.000There's a lot of negative press about subprime auto loans, for instance, which is not exactly the same, but it's a similar thing.
02:03:55.000I mean, the same basic scam of taking loans, chopping them up, and then repackaging them as something that's more valuable than the original loan You can do that with anything, any kind of credit.
02:04:09.000You can do it with credit cards, you can do it with aircraft loans, you can do it with car loans, you can do it with home mortgages.
02:04:17.000And so the mechanism of taking things that are toxic and risky and making them look like AAA is still part of the economy and it's everywhere.
02:04:33.000The plus side of that is that there's more credit available.
02:04:37.000Almost anybody can get a credit card or even if you've had screwed up credit, you can get a car.
02:04:43.000Does this put us on this endless cycle of build up, bubble, collapse, build up, bubble, collapse, rebounding, collapse again?
02:05:08.000When Trump was saying the economy's never been better, look at the stock market, the stock market's killing it, and then it'll have a bad day.
02:05:17.000And you're like, well, okay, well, I thought we were doing great.
02:05:19.000Like, what's going on with this bad day?
02:05:55.000We have some industries that sort of perform well, but if...
02:06:00.000Periodically, we go through these bubbles that are based on nothing more than enthusiasm.
02:06:05.000In the 90s, it was the tech bubble, where people like Alan Greenspan would say things like, well, we have a new paradigm in economics.
02:06:15.000It doesn't matter whether a company hasn't shown any ability to...
02:06:27.000It's just if it's a good idea, the stock is sound, and everybody should invest in it, and the stock market is going to continually go up, so don't worry about it.
02:07:05.000People should use their homes as ATM machines.
02:07:09.000You should consider refinancing your house so that you can get a little bit of extra cash.
02:07:15.000This was actually the message they sent to America.
02:07:18.000Again, it creates this artificial mania where the economy is stoked artificially.
02:07:26.000to gigantic dimensions but it's not based on anything and so when when it crashes when you finally get like any Ponzi scheme it you know it depends it depends on more new investors coming in than old investors leaving right so there's always going to be that moment when suddenly we don't have as many new ones as old ones and the instant that happens it all goes kaboom right and that's what happened with With the subprime market,
02:07:56.000there was a moment in time where they just couldn't keep it going anymore.
02:08:01.000They couldn't find any more new suckers to get to sell mortgages to and the mania ended and it all went splat and then it was amplified by the fact that we have I'm terrified every time I see the stock market go up What's it based on?
02:08:28.000Is it based on our economy actually doing well?
02:09:24.000She had built this company called Theranos right out of college.
02:09:28.000She was like 19 when she started the company.
02:09:31.000It was a blood testing company that just required a small prick of your blood to do complicated blood analysis for diseases and things along those lines.
02:10:01.000Yeah, when you find out that really wealthy people that do this for a living, Warren Buffett does that for a living, that he can get scammed out of $125 million.
02:10:18.000His mantra is supposed to be picking the absolute long-term investment, right?
02:10:27.000So he's not like a Stevie Cohen type who just looks at the tape and tries to time it just right so you can...
02:10:36.000Make an investment for 10 seconds and come out with a, you know, if he's investing in a company and even he can be fooled, that's pretty terrible.
02:10:46.000I mean, Enron was another example of the world's best financial analysts were looking at this company for a decade, and the results were completely ridiculous.
02:10:59.000Like, it should have been obvious to any layperson that these profit numbers couldn't possibly be real.
02:11:07.000And it wasn't until one of those guys, I think it was Jim Chanos, who was sort of a famous short seller, you know, sort of said, hey, wait a minute, there's something up here.
02:11:20.000But people continually invested in these companies, and there's just not a whole lot of oversight that goes on with Wall Street.
02:11:29.000And I think that's a major lesson of, you know, The last 20 years is that there's just not a lot of eyes on crime in this area.
02:11:41.000Another example is, I'm sorry, who's the guy who scammed all the rich people?
02:11:51.000I mean, there are other people who did similar things, but this guy didn't even make investments in You know what I mean?
02:11:59.000Like, he was literally just sort of taking money and, you know, when someone cashed out, he would, you know, it was like, who's that little girl?
02:12:34.000And there are a bunch of stories like this.
02:12:37.000There's a great book called The Octopus, which is about somebody who did a Madoff-like scam, another hedge fund.
02:12:45.000Same thing, they weren't really making trades, they were just sort of creating phony profit and loss statements and creating records that look like trades that they could tell their investors about, but they weren't actually doing anything.
02:12:59.000So if anybody, any expert at any time had just poked their nose You know, not to get back to, you know,
02:13:15.000my drug dealing book, but this is one of the things that he says, which is that, you know, you can be in a, you know, in a poor black neighborhood, and a couple of kids will be on a cell phone talking about selling $10 worth of weed,
02:13:30.000and they'll be picked up by cops, You know, within 20 minutes or something like that.
02:13:36.000Meanwhile, you know, somebody like, you know, Bernie Madoff can commit $100 million frauds year after year after year and not even take any effort to try to cover it up all that well.
02:13:56.000If he had done the exact same thing to poor people.
02:13:58.000What he did was just too easy to call what he did a crime versus what you were talking about with these financial institutions and loans.
02:14:07.000Yeah, if he had laundered it through a slightly more legitimate process, he would have gotten out fine.
02:14:13.000But one of the things that a lot of these guys...
02:14:17.000These scam artists get into it thinking that they're actually going to be real hedge funds and that they have some stock picking system that's actually going to make all their clients money.
02:14:28.000And one of the things they find out is that, A, they suck, they're not outperforming the market, and they're not that smart.
02:14:35.000But B, that their clients can't tell if they just make up the numbers.
02:14:39.000So there are a number of cases of people who start out trying to be legitimate and trying to be real investment advisors, but they just end up turning into Bertie Madoff types because it's just easy.
02:14:53.000There aren't that many people watching for it.
02:14:57.000And, you know, that's kind of scary, too.
02:15:00.000Well, it seems like there's so many people doing it.
02:15:04.000How could there be enough people watching it?
02:15:07.000Think about how many investment firms there are and how many different people that are involved in trading.
02:15:12.000How could anybody be watching all of it?
02:15:30.000AIG was one of the world's largest companies that, you know, before it crashed, it had like 180,000 employees.
02:15:41.000It took advantage of this weird loophole that allows financial companies to essentially choose their own regulator.
02:15:48.000So because AIG had a thrift or a savings and loan, that's basically the same thing.
02:15:56.000They chose to be regulated by the OTS, which is the Office of Thrift Supervision, which is this tiny, tiny little office in Washington that oversees basically savings and loan operations.
02:16:13.000And in the OTS, this is actually true, they had exactly one insurance expert on staff.
02:16:22.000So essentially, the world's largest insurance company was being regulated by A government office that only had one person who really understood insurance.
02:16:33.000And even that person wouldn't have understood the part of the company that blew up, which was essentially an investment bank within the insurance company that was creating these sort of highly advanced derivative operations,
02:16:49.000that they just would not have been able to understand that stuff.
02:16:55.000The government just does not place a lot of resources into, you know, keeping an eye on even the most basic things.
02:17:05.000And when you compare that to law enforcement and other areas, you know, is how many people do we have, you know, worrying about bank robberies in this country or drugs, right?
02:17:18.000Or, you know, how many people are being watched because they're marijuana dealers in other states?
02:17:39.000It was merged into some other, because there used to be the OCC, the Officer of the Comptroller of the Currency, and I think they created a new regulator out of all that after the crash.
02:17:51.000But yeah, AIG chose its regulator and its regulator, you know, was totally overmatched.
02:18:25.000Essentially, they were taking on insurance on packets of mortgages.
02:18:29.000So if they exploded, you would get a payout.
02:18:33.000It's like buying an insurance policy on your neighbor's house.
02:18:37.000If it goes up in flames, you get paid.
02:18:40.000AIG was selling a product that allowed banks essentially to buy insurance on houses, on mortgages.
02:18:48.000And if people foreclosed, if the mortgages failed or pools of mortgages failed, if you bought that kind of insurance, you got these huge payouts.
02:19:00.000So people were betting against mortgages, basically.
02:19:03.000And AIG was taking all this book and But the heads of the company were old school insurance executives and just didn't understand this sort of newfangled, complicated form of insurance.
02:19:19.000And so they would look at the numbers that they were being given and even they didn't get it.
02:19:23.000They didn't understand how exposed they were.
02:19:27.000And so when all the bets started going the wrong way, suddenly they're being asked to pay out billions of dollars and they're like, Wait, where is this coming from?
02:19:36.000So even the companies were kind of clueless about the shit that was going on, it turns out.